A roadmap to push digitisation of retail payments

In continuation of the goal towards further digitisation of retail payments, the Reserve Bank of India has charted out a roadmap for the coming year to ensure the government's drive goes smoothly and the target of 25 billion digital transactions for the financial year is achieved.

Starting from steps taken to ensure security and smooth operation of digital transactions to protecting the needs of the customer and also to regulate the industry better, the RBI has stated various measures it plans to undertake.

The central bank is planning to release the final guidelines around prepaid payment instruments (PPIs) or mobile wallets within this financial year. "Final circular would be issued in the coming year (2018) after examination of the feedback," it said.

Further highlighting the importance of the non-banking PPI players, the RBI annual report for its fiscal year ended June 30 said: "The number of non-bank entities authorised for operating PPIs increased to 55 with 18 authorised during 2016-17, while 54 banks were granted approval to issue PPIs."

While the industry is eagerly awaiting the final decision on the merchant discount rate or the price paid by merchants for accepting payment digitally, the regulator said it would be releasing the documents next year.

"The directions have already been set by the government and now we are waiting for the final regulatory points for the industry which will help us start the action. We are hoping for enough time for any retrospective changes in operation guidelines the regulator might bring in," said Bhavik Vasa, the chief growth officer at Mumbai based PPI player ItzCash. As the RBI seeks to regulate the payments industry better, it also plans to expand payment products on a larger scale. Digitisation of toll collection, one of the primary targets of the government, is something that the RBI plans to roll out nationally next year after completion of a pilot by the National Payments Corp of India.

Harping on the success in converting a large chunk of retail cash payments onto digital platforms, the RBI said digital payments via NEFT (National Electronic Fund Transfer) rose to 1.6 billion in 201617 from 1.3 billion the year before.The value of total transactions shot up to Rs 120 lakh crore from Rs 83 lakh crore. Debit card payments jumped more than twofold to 2.4 billion transactions from 1.1 billion, while wallet payments shot up to almost 2 billion from 750 million in 2015-16.

With the increase in digital payments, cash in circulation amounted to 8.8 per cent of GDP at the end of financial year 2017, down from 12.2 per cent in the previous year. At this level, India's currency to GDP ratio compares well with a host of advanced and emerging market economies, such as Germany, France, Italy, Thailand and Malaysia.

Touching upon Bharat Bill Payments, the digital collection of utility bill payments, the regulator said 70 entities were licensed and a pilot was running with 37 billers across gas, DTH, electricity and telephone services.

The central bank also highlighted certain areas of regulation which it would touch upon this year, starting from a comprehensive relook into independent, or white label, ATM operators and a review of the policy allowing banks to offer mobile banking to customers.

"Towards further transparency in the payments space, the bank would initiate measures to ensure that the payment system operators clearly disclose the fees and terms and conditions of their services to the customers," said the RBI about its measures to protect customers.The RBI also plans to start SMSbased alerts for RTGS (Real Time Gross Settlement) transactions just like NEFT payments.

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